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Dividend Champions Smackdown XXXV

In the most recent installments of the Smackdown series, I screened the Dividend Champions (which can be found here: http://dripinvesting.org/Tools/Tools.asp) using a high (2011) Dividend Growth Rate with low Beta and, last month, by combining a high (2012) Dividend Growth Rate with low Free Cash Flow Payout and high Return on Equity, two columns that were added at the end of December.

(Note that I have separated the Champions, Contenders, and Challengers into different articles to fit more closely into the format preferred by Seeking Alpha. Champions are companies that have paid higher dividends for at least 25 straight years; Contenders have streaks of 10-24 years; Challengers have streaks of 5-9 years. I use the same Roman numeral for all three articles.)

This month, I decided to start with another new column added at the end of 2012 and focus on metrics that are generally better when they're on the low side. So I screened as follows:

Step 1: After eliminating companies that had not increased their dividend in more than a year and those that had agreed to be acquired, I sorted by the new Debt/Equity Ratio (column AJ), low to high. Eliminating companies with as much Debt as Equity (Ratios of 1.00 or higher) or those that were "n/a" cut the list of initial candidates to 74 companies.

Step 2: Sort the companies by their Trailing Twelve Months' Price/Earnings Ratio (column V), low to high. Eliminating companies that had P/Es above 16 (or had no number) cut the list to 25 companies.

Step 3: Sort the remaining companies by their 5-year Beta (column CF), low to high. Dropping those at or above 1.00 cut the list to 16 candidates.

Step 4: Sort the companies by their Yield (column I), high to low, and eliminate any company with a yield below 2%. That cut the list to 14 companies.

Step 5: Sort the companies by their Most Recent (Percentage) Increase (column L), high to low, and eliminate any company with a figure below 2%. That cut the list to 11 companies, which appear below.

(Note that I've sorted the companies back into alphabetical order.)

Company

Ticker

No.

1/31

Div.

MR%

TTM

Debt/

5-yr

Name

Symbol

Yrs

Price

Yield

Inc.

P/E

Equity

Beta

1st Source Corp.

(NASDAQ:SRCE)

25

22.60

3.01

6.25

11.19

0.54

0.66

3M Company

(NYSE:MMM)

54

100.55

2.35

7.27

15.91

0.33

0.89

Chevron Corp.

(NYSE:CVX)

25

115.15

3.13

11.11

9.45

0.09

0.79

Chubb Corp.

(NYSE:CB)

47

80.31

2.04

5.13

11.66

0.22

0.49

Commerce Bancshares

(NASDAQ:CBSH)

44

37.55

2.33

5.00

12.90

0.50

0.57

ExxonMobil Corp.

(NYSE:XOM)

30

89.97

2.53

21.28

9.50

0.07

0.51

Medtronic Inc.

(NYSE:MDT)

35

46.60

2.23

7.22

14.98

0.67

0.90

Universal Corp.

(NYSE:UVV)

42

54.38

3.68

2.04

9.96

0.40

0.99

Wal-Mart Stores Inc.

(NYSE:WMT)

38

69.95

2.27

8.90

14.39

0.78

0.35

Weyco Group Inc.

(NASDAQ:WEYS)

31

22.78

2.99

6.25

14.89

0.26

0.62

WGL Holdings Inc.

(NYSE:WGL)

36

41.93

3.82

3.23

15.47

0.64

0.22

Conclusion

Although there are several familiar names, there are also a few surprises, probably because the screen began with the low figures in the three columns to the right, which may indicate that these companies have few surprises in store. As always, please consider this no more than a starting point for more in-depth research.

As an extra step, I'm including one of Chuck Carnevale's F.A.S.T. Graphs for the company that appears to be the most undervalued, as indicated by its price line being in the green-shaded earnings area, just below.

(click to enlarge)

Source: Dividend Champions Smackdown XXXV